Clueless: Advertisers Looking For Answers In Yahoo's Q2 Earnings

Question-mark-A2Can a partnership with Facebook turn around an ailing Internet giant? The ad industry may not see it in Yahoo's Q2 2012 earnings, but it will likely become a positive step in an uphill direction. Yahoo signed an advertising partnership with Facebook after settling pending patent lawsuits. Insiders will look for Yahoo interim CEO Ross Levinsohn to provide clues about Yahoo's future on Tuesday when the company reports earnings.

J.P. Morgan Analyst Doug Anmuth sees a "potential upside" to Yahoo's search business based on its alliance with Microsoft Bing. He points to better broad match and tools for paid-search ads, although comScore data suggest that the company continues to lose share of searches. Since revenue per search (RPS) gains are not likely to drive monetization beyond existing numbers, the analyst firm estimates search net revenue for the quarter of $374 million, up 1% from the year-ago quarter.

Google continued to dominate search market share in Q2 2012. Among Marin's clients, the Mountain View, Calif. search company in the United States garnered 81% of spend, 80% of click share, and 66.7% of overall U.S. search volume. Despite slipping in overall click share, Yahoo and Bing continue to show growth in click volume and costs per click, according to a trend report from Marin Software.

Marin Software's Online Advertising Report – Key Trends & Insights report agrees with Anmuth's conclusion. Analysis attributes efficiency gains during the past year partly to refining match types from broad to phrase or exact, increasing relevance and the CTR for keywords, improving quality scores and lowering costs.

In the past year, search marketers increased their use of exact match, growing click share by 3% while increasing the amount spent on exact match types by 1%. Overall, the Bing and Yahoo alliance drove 14% higher click volume for advertisers in Q2 2012, along with a 22% jump in costs per click (CPCs) and a 5% rise in the click-through rates (CTRs), according to Marin's report.

Google queries rose in June, compared with the year-ago quarter, taking 66.8% share of searches. Yahoo's queries fell 16% year-on-year to take 13% share of searches. And Bing increased its share of queries by 11% year-on-year, taking 15.6%.

Aside from answering questions about search engine marketing and the Alibaba transaction, Yahoo could get questions from analysts about the stolen 450,000 email addresses and passwords and user names from the company's Contributor Newtork. The breach includes some email addresses through Gmail, Bell South, MSN, SBC Global Hotmail, and AOL. A group identifying itself as D33D point to the hack as a wakeup call for Yahoo rather than a threat.

The Privacy Council links to a site listing the names of stolen passwords or user names.

Analyst consensus expect Yahoo to report Q2 2012 revenue of $1.08 billion, down 11.2%, sequentially. Total acquisition cost (TAC) is expected to come in at between $140 and $150 million, along with other costs between $915 and $945 million, generating an operating income of between $115 and $195 million. "Out of the 23 analysts providing estimates, none revised the estimate for the second quarter in the last 30 days," according to a report. "Over the same period, one analyst made an upward revision for fiscal 2012."

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